NVIDIA vs. Micron: Only One AI Stock Is a Clear Buy Right Now

Banking on the artificial intelligence (AI) boom, Micron Technology MU, led by Sanjay Mehrotra, has significantly outperformed Wall Street darling NVIDIA Corporation NVDA this year, gaining 253.9% compared with NVDA’s 20.7%. Let’s examine their recent performances and assess whether Micron offers a more attractive investment case –

Image Source: Zacks Investment Research

The Bullish Case for NVDA Stock

NVIDIA reported revenues of $81.6 billion in the fiscal first quarter of 2027, up 85% year over year and 20% quarter over quarter, according to the company’s press release. The strong performance was driven by incessant demand for NVIDIA’s state-of-the-art AI chips and computing platforms.  

Meanwhile, major cloud providers continued to ramp up investments in NVIDIA’s graphics processing units (GPUs) as they increased spending on AI infrastructure, helping drive robust growth in the company’s data center business segment. Data center revenues hit a record $75.2 billion, representing a 92% year-over-year jump and 21% growth from the prior quarter. 

Revenues are expected to reach $91 billion, plus or minus 2%, in the fiscal second quarter of 2027, driven by strong AI demand. Growth is not limited to sales, as the company expects to maintain robust profitability. NVIDIA projects a non-GAAP gross margin of 75%, plus or minus 0.5%, in the fiscal second quarter, in line with the 75% margin reported in the fiscal first quarter. 

The Bullish Case for MU Stock 

Micron reported revenues of $41.46 billion in the fiscal third quarter of 2026, well above the $23.86 billion reported in the previous quarter and the $9.3 billion reported a year ago, according to the company’s press release.  

Strong demand for Micron’s advanced high-bandwidth memory (“HBM”) chips fueled the company’s top-line growth. The demand for HBM chips used in AI servers remains strong, as they are efficient at handling complex AI workloads and offer greater power efficiency.

The company further expects revenues to increase to approximately $50 billion in the fiscal fourth quarter of 2026. The company also projects a strong gross margin of around 86% for the fiscal fourth quarter, fueled by strong AI memory demand and favorable pricing. 

Micron Has the Edge Over NVIDIA: Why It’s the Better AI Buy 

Strong demand for NVIDIA’s AI GPUs and Micron’s HBM chips is driving revenue growth and profitability for both companies and supports a bullish outlook. However, at current levels, Micron appears more attractively valued than NVIDIA. Per the price/earnings ratio, MU trades at 13.7 forward earnings compared with NVDA’s forward earnings multiple of 24.76.

Image Source: Zacks Investment Research

NVIDIA’s premium valuation requires sustained strong growth to justify further upside, while Micron may have a greater potential to outperform through steady earnings growth. NVIDIA’s growth story may hit roadblocks if there is a potential slowdown in AI spending, while export curbs on the sale of chips to China could weigh on the company’s margin.  

On the other hand, HBM supply constraints amid strong demand have improved Micron’s revenue visibility and are likely to boost its profit margins. Thus, at present, Micron appears to be the more compelling investment opportunity.

While Micron has a Zacks Rank #1 (Strong Buy), NVIDIA has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Radical New Technology Could Hand Investors Huge Gains

Quantum Computing is the next technological revolution, and it could be even more advanced than AI.

While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.

Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.

Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research